Hold Indian Railway Catering and Tourism Corporation; target of Rs 809: Prabhudas Lilladher

Prabhudas Lilladher's research report on Indian Railway Catering and Tourism Corporation

IRCTC’s operational performance was broadly in-line with our estimate with EBITDA margin of 34.0% (PLe 33.0%). EBIT margin of internet ticketing was at a 7-quarter high of 84.7% presumably led by an improvement in yield (realization per ticket was Rs20) which could be a function of better product mix (higher share of AC or non-UPI tickets). As e-ticketing penetration has reached ~87%, we expect non-convenience pie to drive the revenue growth in internet ticketing division. As for Rail Neer, addition of 3 new plants will provide the growth fillip while catering division has embedded optionality arising from 1) rising e-catering volumes 2) potential in non-railway catering and 3) launch of Vande Bharat trains.

Outlook

We expect sales/PAT CAGR 9%/8% over FY25E-FY27E and retain HOLD on the stock with a TP of Rs809. We have revised our target multiple to 44x (earlier 48x) as we roll-forward our valuation to Sep-26E.